Canadian Institute of Actuaries L’Institut canadien des actuaires 2006 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2006

PS-8 Allan Brender Capital requirements Changes for 2006 Changes for 2007 Introduction of advanced approaches Practice certificates and the role of the Appointed Actuary

Changes for 2006 MCCSR MCT No changes to requirements AA’s opinion and report now required by CIA MCT No changes

Changes for 2007 MCCSR Adjustment for move to asset fair values Change w.r.t. FX for branches (TAAM) MCT Beginning in 2007, all capital changes will be effective as of January 1

Introduction of Advanced Approaches Initially, a project for MCCSR P&C industry is expressing interest w.r.t. MCT Applies to larger and more technically sophisticated companies

Introduction of Advanced Approaches Advanced approaches involve the use of company-specific risk measurements Make greater use of company data and perhaps internal models Also considering two fundamental changes Move to total balance sheet approach Consider diversification effects

Introduction of Advanced Approaches Also have to modify MCCSR and MCT for expected accounting changes emerging from the introduction of IFRS4 Therefore, the project will also involve changes to the current standard approaches

Introduction of Advanced Approaches Have formed the MCCSR Advisory Committee (MAC) to guide the process Includes representation from OSFI and AMF CIA CLHIA Assuris (formerly CompCorp)

Practice Certificates and the AA Likely that practice certificates will not be required by the CIA in 2006 OSFI will state in its memorandum that it expects AAs to satisfy all proposed requirements for the certificates

Practice Certificates and the AA Concern, based on the tone of comments on the general list, that there is misunderstanding about the history and evolution of the role of the AA, OSFI’s responsibilities and its relationship to the CIA

Practice Certificates and the AA Introduction of the AA is a devolution of authority from the regulator to the profession The regulator retains ultimate responsibility The regulator relies on the AA

Practice Certificates and the AA The framework includes delegation of policing to the CIA CIA has generally been pleased to accept this role Difficult to imagine why a profession would not want the ability to police itself rather than having others do it

Canadian Institute of Actuaries L’Institut canadien des actuaires 2006 Seminar for the Appointed Actuary Colloque pour l’actuaire désigné 2006